First published on 28 February 2024
This statement of policy (SoP) sets out the approach that the Prudential Regulation Authority (PRA) expects to use in relation to capital add-ons (CAOs).
It covers:
- the circumstances under which the PRA expects to consider setting a CAO;
- the methodologies the PRA expects to use to calculate a CAO;
- information relevant to the use of CAOs at group level;
- the process the PRA intends to follow when setting a CAO; and
- the ongoing monitoring, reporting, and removal of a CAO.
This SoP is relevant to all UK Solvency II firms, the Society of Lloyd’s, its members and managing agents, herein referred to collectively as ‘firms’. This SoP is also relevant to all UK holding companies.
This SoP should be read in conjunction with the Solvency II internal models: Permissions and ongoing monitoring SoP, and the Solvency Capital Requirements and Group Supervision Parts of the PRA Rulebook.